Risk Management in Banking Sector

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Summer Training Project Report

ON

Risk Management in Banking Sector

Summer Training Project Report Submitted for Partial Fulfillment for the Award of the Degree of
MASTER OF BUSINESS ADMINISTRATION
(MBA)

UNDER THE SUPERVISION OF
Prof. S.P Jain

SUBMITTED BY
Varun Sharma
0871913907

GITARATTAN INTERNATIONAL BUSINESS SCHOOL
(Affiliated to GURU GOBIND SINGH INDRAPRASTHA UNIVERSITY)
ROHINI, NEW DELHI – 110085
(2007-09)

ACKNOWLEDGEMENT

I express my heartiest gratitude to Mrs. ANITA KHANNA (CUSTOMER RELATIONSHIP OFFICER - PNB) for giving me an opportunity to prepare a report on the project assigned to me. I am also thankful to Prof. S.P Jain, faculty, Gitarattan International Business School, Rohini. Under their guidance I undertook this project, for extending the advice and direction that is required to carry on a study of this nature, and for helping me with the intricate details of the project at every step. Without her support and able guidance, it would have been very difficult to finish this work in the way I have done it.

However, I accept the sole responsibility of any possible errors of omission.

Varun Sharma

TABLE OF CONTENTS

1. INTRODUCTION -
• Objectives of the study 5 • Scope of study 6 • Limitations of study 6

2. DEFINITION OF RISK –
• What is Risk? 12 • What is Risk Management? Dose it eliminate Risk? 12 • Objectives of Risk Management functions 13 • Risk in Banking 14

3. TOPOLOGY OF RISK EXPOSURE –
• Market Risk 19 • Credit Risk 25 • Operational Risk 36

4. AN IDEALIZED BANK OF THE FUTURE 48

5. STUDY OF OPERATIONAL RISK AT PUNJAB NATIONAL BANK 49

6. REFERENCES 54

EXECUTIVE SUMMARY

This project at Punjab National Bank was undertaken during the period of 2 months (JUNE 1st ’08 to JULY 31st ’08) as part of my summer training

As part of summer training, I was made to accompany Customer Relationship Officer to observe Client Interaction, gauge the level of satisfaction by listening and solving quarries of existing clients also helped in making new clients. My Summer Training included the following-

• An in-depth induction through the Computer Based Training Module • Learning the basics of the various Baking Operations such as – procedure of opening new account (Savings, Current), printing and updating of passbook, procedure of opening a F.D, deposits / withdrawals, issuing of ATM cards and internet banking passwords etc. • Various Documents Necessary or Required at the Time of Opening of Account • Accompanying Customer Relationship Officer to observe client interaction. • Client Acquisition.

During the course of my training, I got valuable insights about the workings in a bank branch, internet banking and client...
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